The price increase of LED display raw materials will become the norm in 2021
After the price increase a year ago, just when everyone thought that the market would not fluctuate too much after the holiday, the prices of raw materials began to rise again! This wave of price increases seems to affect the entire industry. At present, the price increase has spread to the LED lighting industry, which puts obvious pressure on the entire LED lighting industry chain.
Rise! Rise! Rise!
Signify, the world's leading lighting brand, issued another price increase letter. On February 26, Signify (China) Investment Co., Ltd. issued a 2021 Philips brand product price adjustment notice to regional offices and various channel distributors and end users, raising the prices of some products by 5%-17%.
According to the notice, as the global new crown epidemic continues to spread, all major commodities in circulation are facing price increases and supply pressures. As an important production and living material, the cost of lighting products has also been greatly affected. The imbalance of supply and demand and other reasons have caused the price increase of various raw materials such as polycarbonate and alloy involved in the production of lighting products and the general increase in international transportation costs. The superposition of these multiple factors has caused a greater cost of the company’s light sources and lighting products. Influence.
Therefore, the company decided to adjust the suggested retail prices of the following traditional lighting and empty package lighting product lines from March 5, 2021 for reference.
In addition, the "Notice" also stated that Philips Lighting decided to adjust the suggested retail prices of some LED lighting product lines for reference from March 16, 2021. Philips Lighting’s LED lighting product line for price adjustments this time involves 20 products in three product categories, “LED lamps, LED light sources, LED power supplies and modules”, with price increases ranging from 4% to 7%.
Raw material price hikes out of control
After the resumption of work in the Year of the Ox, the prices of raw materials such as copper and aluminum have risen everywhere. To what extent did the raw materials skyrocket? According to CCTV Financial Report: Copper rose by 38%, plastic rose by 35%, aluminum rose by 37%, iron rose by 30%, glass rose by 30%, zinc alloy rose by 48%, stainless steel rose by 45%, and IC rose by 45%. Up to 100%.
According to the notification letter of Auman Lighting, the price increase of various raw materials is higher than that in 2020.
Copper rose by 20% Aluminum rose by 15%-20% PVC rose by 25%-30% Packaging materials rose by 10%-15% Lamp beads rose by 10%-15% Electronic components rose by 40%-50% In addition, these supplies Chain companies also announced price adjustments:
On February 23, Silan Microelectronics issued a price adjustment letter stating: “Due to the rising prices of raw and auxiliary materials and packaging, the cost of our related products continues to rise. In order to ensure the supply of products and maintain good business relations, the company After careful study and decision, from March 1, 2021, our company will adjust the prices of some discrete device products (all MS products, IGBT, SBD, FRD, power pair tubes, etc.). Communication."
According to Times News on February 22, LED packaging factory Everlight has benefited from strong demand for optocoupler products, and production capacity is in short supply. Recently, the price has been increased by 10-30%. The visibility of orders has been seen in August, which is beneficial this year. Performance has grown compared to last year.
Dilemma: up or down?
Previously, companies such as Cooper Lighting Solutions, Maxlite, TCP, Acuity, QSSI, Hubbell and GE Current have successively announced price increases. Due to the rising prices of raw materials such as copper, iron, aluminum, and plastics, as well as the decline in terminal inventories and the warming of demand, the LED industry has set off a wave of price increases since the end of last year. Signify raises prices again, do other domestic brands follow up?
Years ago, due to rising costs, its product costs surged by 10%, and product prices also increased by 5% to 8%. According to the current trend of raw material prices, another price increase is almost inevitable. However, due to the current large volume of products and low prices, the situation of frequent price wars has been formed! The price of raw materials has skyrocketed, as well as packaging costs, labor costs, and shipping costs. Everything is rising. The only thing that is difficult to increase is the price of the product!
Yesterday, several entrepreneurs called us and said: The surge in bulk commodities has dealt a serious blow to the manufacturing industry. They dare not accept orders. If the price of products rises, customers will be lost. If you don’t rise, you will lose money. As all aspects go up, the products you sell will rise sharply. , This will cause system chaos.
If you look for cheaper alternatives, this will make the quality worse and worse. Coupled with the improvement of the epidemic situation, some orders will be transferred to other countries, which will make the production company worse. Once customers are lost, this means bankruptcy, and you don’t want customers to lose. , There is only a small increase, but the profit margin becomes smaller and smaller. Once there is a quality problem, it will lose money.
In this case, the production enterprises have been forced into a dilemma. "Rising or not?" is the most difficult problem that tests enterprises. On the one hand, the rise in raw materials and the increase in production costs of enterprises, on the other hand, it is difficult for the terminal market to absorb the cost pressures undertaken by enterprises.
In the context of rising costs in all aspects, does your company choose to increase prices or to survive?
Thoughts brought about by price increases
The price hike may not be a good response from the market, and the industry reshuffle will further intensify.
The ability to control the (external) market environment and changes in consumer demand is ultimately derived from the optimization and upgrading of (internal) products, processes, and services. In addition to reasonable price increases, this round of storms will also encourage more companies to reduce costs and increase efficiency and ensure profits through other means. For example: on the one hand, optimize the manufacturing process, reduce the complexity and reduce the cost of manufacturing; on the other hand, select suppliers and choose suppliers with good quality, good price and good service to cooperate to minimize risks.
In addition to the quantitative elements such as raw materials, which are affected by price, service and quality are also important links that affect prices. Opportunities driven by product price increases, it is recommended to grasp: ①price-performance elasticity; ②industry competitive position; ③cost and resource advantages Wait for a few main lines.
Raw material prices are getting higher and higher, labor and transportation costs continue to rise, and cost pressures are increasing... 2021 does not seem to be better for LED screen companies, especially those that used low prices as their competitive advantage. Small brands, seeing the terminal market gradually improve, the order volume has begun to rise, but raw materials are not available, the inventory is insufficient, and there is no way to survive. As analyzed by industry insiders: "Through this adjustment of ‘price increase’, another wave of LED screen companies with poor anti-risk capabilities will fall! And leading companies will also seize the opportunity to grab more market share..."
Order decisively and stock up reasonably! As we all know, before and after the New Year, the LED display industry has been a relatively prosperous time for sales and production. Many LED display companies want to seize the peak season and make a lot of money. However, if there was insufficient stocking a year ago, and now faced with production lag (for reasons such as untimely replenishment of raw materials), you can only guard the empty warehouse and watch the orders slip away! Therefore, I would like to remind the distributors that in special periods, ordering must be decisive, and of course, they must be reasonably stocked in accordance with their own and market conditions to reduce operating risks.
The price hike is just the beginning! Numerous phenomena show that the current wave of price increases in raw materials is just the beginning, and subsequent price increases will inevitably drive up prices in all walks of life. In addition to the LED display industry, household appliances, smelting and other industries are facing crises such as shortage of raw materials, environmental protection and capacity reduction, a more complicated foreign trade environment, and unsalable products, which may eventually trigger a wave of closures of a large number of small and medium-sized enterprises.
Rise or not? Difficult at both ends! The profit of the industry is getting thinner and thinner, and the price of terminal products "rise or not" is the most difficult problem for LED screen companies. Rising, I am afraid that the customers who have been found hard to find will be lost. In the face of rising costs of raw materials, labor, processing fees and other aspects, for many LED display manufacturers and distributors, how to make up for the intermediate profit gap?
At the same time, the leading screen companies headed by Qianli Jucai have issued a "price reduction promotion" notice. From this, it is clear that China's LED display industry after March will face the challenges faced by enterprises and merchants at the operating level. There are two core pressures: First, the price of upstream raw materials continues to rise, and the resulting cost rise will show a trend of rising costs; second, a new round of position competition led by leading screen companies is about to start, how small and medium-sized screen companies and distributors should response?
Of course, under the crisis, the start of 2021 will also have many advantages. 5G\8K applications will accelerate, the ultra-high-definition video industry is about to take off, and Mini/Micro LED will further increase. At the same time, the industrial transformation and adjustment is accelerating, and more and more LED screen companies are adopting product adjustments. Structure, marketing strategy, promote the growth from scale to scale and quality; in general, in the process of operation and competition in the first-line market, LED display manufacturers and distributors, whether it is the increase in supply prices or price reductions, are essentially the same. It is only a means rather than an end. In the new consumer era, better facing users, focusing on needs, and exploring more diversified and diversified business methods and strategies are the key points.
Therefore, in the face of a new round of raw material price increases, LED display manufacturers and distributors can jump out of the old difficulty of "rise or not", focus on the first-line market and mainstream users as soon as possible, and explore more commercial competition methods and content.
In the beginning of 2021, what everyone in the industry did not expect is that the price of raw materials is rising faster than the temperature. Recently, due to the "supply shortage" factors, the prices of raw materials such as copper, iron, aluminum, and plastics have continued to rise; due to the collective closure of large global refineries, chemical raw materials have soared almost across the board...Affecting all walks of life, including led displays.
One price per day for raw materials! It is not that one category is rising, but most categories are rising; it is not a rise of 3 or 5 points, but a rise of 10% or 20%.
Yesterday’s offer has expired! Please inquire before placing an order!
According to relevant monitoring agency data, since June last year, domestic commodities have continued to rise. According to CCTV Financial Report: Copper rose by 38%, paper rose by 50%, plastic rose by 35%, aluminum rose by 37%, iron rose by 30%, glass rose by 30%, zinc alloy rose by 48%, and stainless steel rose by 48%. Soaring 45%, IC rose 100%. Entering the end of February, as various forces continue to increase their weight, the trend of price increases is becoming increasingly fierce.
By the end of February this year, compared with before the Spring Festival, the price of copper has risen by 38%, alloy by 48%, aluminum price by 37%, iron ore by 30%, stainless steel by 45%, and glass by 30%. %, cartons have risen by 20%, foam packaging has risen by 15%, and plastics have risen by 35%...Many manufacturers have also reported that since the beginning of the year, the overall situation of industrial raw materials such as plastics, textile materials, copper, energy, electronic components, industrial paper, etc. The crazy price hikes completely disrupted the production plans of terminal manufacturers, and many production lines were forced to press the pause button. Panel A few days ago, a number of research institutions issued a briefing on the trend of panel price increases, and it is expected that the tight supply situation in the global panel market will continue into the second quarter. Supply continues to be tight, pushing the price strategy of head panel manufacturers to become aggressive, and the prices of mainstream size products will maintain a large increase from February to March.
LED display screen, as one of many electronic products, was also deeply trapped in last year's "price increase". In October last year, the prices of RGB packaging devices, LED display driver ICs, PCB boards, and even steel, plastic, glue and other upstream raw materials continued to rise. At about 10%, this has an extraordinary impact on LED display products.
Last year, people in the LED display industry made predictions, saying that this wave of "price increases" in 2020 will not easily dissipate, and will continue into 2021. Now, at the beginning of the new year, the crazy price increase of raw materials such as copper, iron, aluminum, and plastics confirms last year's forecast, or it will continue until the middle of this year.
After the resumption of work in the Year of the Ox, the price of LED display raw materials has soared by more than 30% year-on-year, and many LED display companies are facing severe cost pressures. On the other hand, with the improvement of overseas market conditions, some insiders predict that this March is expected to usher in an overseas upward adjustment. At the same time, as the market for ultra-high-definition LED products such as Micro/Mini LEDs has increased in volume, many LED display brands have gradually begun to increase product premiums, which has set off an upsurge of product upgrades in the industry. What is the trend of China’s LED display industry this year? Let's see.
Post time: Sep-15-2021